At what is often an emotionally charged and exhausting period, preparing for a funeral and dealing with the life administration of a passed loved one can be challenging. It comes as no surprise that during this time, many feel overwhelmed by the different options presented to them.

In this guide we break down the different funeral costs, look at some of the terminology used by funeral directors and plan providers, and help you become more comfortable with the various financial components of a funeral.

We will explore how funds are allocated to funeral plan trusts, what fees you should expect to pay, and how disbursements (third-party costs) work. We’ll also consider the differences between an arrangement at the time of need, versus the setting up of a funeral plan.

Funeral costs for someone who has recently passed

When someone passes away, the family or estate typically bears the cost of the funeral, which can be broken down into three main categories: a funeral director’s services, third-party costs (disbursements), and optional extras.

Funeral Director’s Fees and Services

Funeral directors manage the practical aspects of the funeral, and their services can include:

• Collection and care of the body
• Organising the funeral (e.g. service arrangements, transportation)
• Preparing legal paperwork (death certificates, burial or cremation permits)
• Assistance with selecting coffins, urns and headstones
• Hosting or coordinating the funeral service

These fees usually comprise a fixed price for their core services, but can vary depending on location, the type of funeral (burial or cremation), and the scope of services requested.

To be sure that you’re paying the correct amount for the services your funeral director is providing, you can ask to see their Standardised Price List. This list is a legal requirement for all funeral directors and was brought in by the Competition and Markets Authority (CMA) in September 2021.

The aim of Standardised Price Lists is to ensure consumers have visibility of the costs throughout the funeral planning process, and to give confidence that every consumer is being treated fairly and equally.

Disbursements (Third-Party Costs)

Disbursements are third-party costs incurred by the funeral director on behalf of the family. These tend to be costs associated with the burial or cremation of the deceased, and other services booked and managed by the funeral director themselves. Common disbursements include:

• Cremation or burial fees: The fee for cremation or purchasing a burial plot from a cemetery.
• Officiant fees: Payment to a priest, minister, celebrant, or other officiant who conducts the service.
• Death notices and obituaries: Publishing the notice in a local newspaper or online platform.
• Flowers, transportation, and orders of service booklets: Other personalised additions for the funeral.

These costs vary significantly depending on your location and choices, and they may be paid directly by the family or bundled into the funeral director’s final invoice.

Optional Extras

These are additional costs that families may choose to enhance or personalise a funeral service:

• Memorial headstones or grave markers
• Catering or venue hire for post-funeral gatherings/wakes
• Video tributes, slideshows, or live streaming services
• Upgraded coffins or ashes urns

Prepaid Funeral Plans

Prepaid funeral plans allow individuals to plan and pay for their funeral in advance, and these types of product have been regulated by the Financial Conduct Authority since July 2022. These plans lock in today’s prices, potentially saving your loved ones from rising funeral costs in the future. They’re also a great way of ensuring your wishes are reflected in the funeral planning, as you’ll have pre-determined what sort of funeral service you’d like.

There are a few critical aspects of how these plans work, including the allocation of money into a funeral plan trust, the payment of administration and marketing fees, and the coverage of disbursements.

Funeral Plan Trust Funds

When you purchase a prepaid funeral plan, most of the money goes into a funeral plan trust which is run by your funeral plan provider and managed by trustees. The purpose of this trust is to safeguard the funds and ensure they are available when needed to cover the future funeral costs, with the Financial Conduct Authority setting limits on minimum funding levels for a fund – this means that all plan providers need to have 110% of the value of all funeral plans sold available in their trust, at all times.

This means that should every single plan holder need to either make the funds available to funeral directors for the purpose of a funeral, or to cancel and remove the funds, there will still be 10% headroom for anything untoward that the business may encounter.

All money deposited into a funeral plan trust is ring-fenced and independently managed, with the aim of growing the value of the trust over time to cover any future rise in funeral service costs.

Administration and Marketing Fees

Prepaid funeral plans often include administration and marketing fees, which cover the costs of setting up, managing, and promoting the plan. These fees may be charged up front or factored into the total plan cost. They generally cover:

• Administration fees: These include the costs of managing your payments, maintaining records, compliance with legal and regulatory requirements, and handling the trust fund.
• Marketing fees: This refers to costs associated with advertising, promotions, and sales activities for the funeral plan provider.

While the bulk of your payment goes toward covering the future cost of the funeral, these fees ensure the plan remains operational and available to consumers. They typically represent a small percentage of the total plan cost but can vary between providers.

Instalment Fees

Most funeral plan providers charge an instalment fee for plans taken out over several years, which enables them to further protect a funeral plan against inflationary pressures. Whereas with a plan that is paid in full at the point of purchase will gain interest within the funeral plan trust, this is not the case for plans paid in instalments.

Instalment fees vary by provider, but expect to pay somewhere in the mid-single figure range. At Funerals With Grace, you’re only able to pay over periods of up to 5 years, meaning that your instalment fees do not become disproportionate compared against your plan value. Some providers offer instalment plans up to 25 years, which can leave you with a hefty interest payment once everything is paid up.

Disbursements in Prepaid Funeral Plans

It is crucial to understand that disbursements (third-party costs) are not always fully covered by prepaid funeral plans. Many plans primarily cover the funeral director’s fees and services but may offer a cap on disbursements. This means:

• Your prepaid plan may only cover a portion of the third-party costs (such as burial or cremation fees, medical certifications, or officiant fees), with any extra charges needing to be paid at the time of the funeral.
• Some providers offer options to extend the disbursement cover, so it’s important to review the terms of your plan when considering

If disbursements increase significantly due to inflation or local costs, your loved ones may have to pay the difference, unless the plan specifies otherwise.

Differences Between At-Need and Prepaid Funeral Costs

• At-need funerals require immediate payment for all aspects of the service, usually by the estate or family. Depending on the funeral director, you’ll need to pay a portion of the fee as a deposit, and settle the remaining balance ahead of the funeral service taking place.
• Prepaid funeral plans involve paying ahead of time, allowing you to lock in current prices and protect your family from rising future costs. However, prepaid plans may not cover all disbursements.

Key Considerations:

• Flexibility: At-need arrangements allow more flexibility in choosing funeral services at the time of need, while prepaid plans need to be updated if your preferences change at any point.
• Financial Security: Prepaid plans provide peace of mind by guaranteeing coverage for many funeral elements, but you must ensure you understand what is fully covered and what isn’t. With a funeral plan you’ll be protected against price rises from the day you purchase it, whereas at-need funerals will leave you exposed to frequent or rapid fluctuations in funeral costs. Average funeral prices in the UK being more than £4,000 demonstrates great value in funeral plans starting at just £1,340.
• Administration and Fees: Prepaid plans incur administrative and marketing fees, which are not relevant in at-need arrangements, where costs are entirely related to the services provided.

Whatever type of funeral you’re looking at planning, it’s important to understand what your funeral costs might look like. At-need funeral services involve direct costs that must be paid at the time of the service, while prepaid funeral plans offer a way to mitigate future expenses, though you need to be mindful of what is covered and the fees involved.

To find out more about With Grace’s range of funeral plans, or to arrange a funeral today, speak to our team. You can call us on 0800 471 4689, or email us on support@funeralswithgrace.com.